Rhode Island’s $9.97 billion fiscal 2020 budget is headed for Gov. Gina Raimondo’s desk.
Bond initiatives include the approval of up to $200 million in Grant Anticipation Revenue Vehicle, or Garvee, bonds to fund the reconstruction of the Interstate 95 viaduct in Providence. The Garvee program enables states to begin highway projects in anticipation of receipt of federal funds.
Both branches of the legislature approved the spending plan last week. The Senate left the House version unchanged. Raimondo, who lacks line-item veto power, is expected to sign it.
"There are no particular surprises and I see no red flags,” said Eric Kim, a senior director at Fitch Ratings.
The budget looks to close a $200 million gap.
The budget also authorizes the Rhode Island Turnpike and Bridge Authority to issue up to $50 million in revenue bonds to finance renovations and repairs to the bridges under its watch: Mount Hope, Jamestown Verrazzano, Newport Pell and the Sakonnet River Bridge.
Lawmakers supported some of Raimondo’s initiatives, notably increased education spending, but did not include the governor’s request to legalize cannabis, nor her call to increase the hotel tax and excise tax on firearms and ammunition.
The halt on the cannabis bill is another example of roadblock nationally from lawmakers and law-enforcement groups during what was expected to be a breakthrough year for such legislation, although Illinois in early June became the 11th state to legalize recreational marijuana.
“One thing that jumped out at me was that the cannabis legislation did not go through,” Kim said of Rhode Island.” It's not a big dollar amount but it's interesting from a policy perspective."
The budget bill continues the phaseout of the car tax, while removing sales taxes for feminine hygiene products.
Fitch and S&P Global Ratings rate Rhode Island's general obligation bonds AA, while Moody’s Investors Service assigns its Aa2 rating. All three assign stable outlooks.
The budget would also create a board of trustees for the University of Rhode Island. The board would supplant the six-member Council on Post-Secondary Education, which oversees state universities.
Also included for URI were authorization for revenue bonds for construction, including $51.5 million for the renovation and expansion of Memorial Union and $26.9 million for a new combined health and counseling center.
Lawmakers also added a proposal by House Majority Leader Joseph Shekarchi and Sen. Mark McKenney, both Warwick Democrats, to provide a work-around for owners of “pass-through” entities whose state and local taxes exceed the new $10,000 cap on the SALT deduction on their federal tax returns, instituted under the 2017 federal tax overhaul.
The change will allow pass-through entities, such as limited liability companies, S corps, partnerships and sole proprietorships, to pay the state tax on their business income, instead of passing it along to their partners to claim on their personal income tax returns.
Based on legislation enacted in Connecticut, it is expected to be revenue-neutral for the state.
